Consumption tax revenues fall for first time last year

With consumers tightening their purse strings amid the ongoing economic slump, consumption tax revenues dropped last year for the first time.

The National Tax Service (NTS) said Monday that earnings from three kinds of consumption taxes, liquor, transportation and special excise came to 12.6 trillion won last year, off 0.5% from 1999.

Consumption tax revenues had increased steadily from 7.8 trillion won in 1995 to 9.9 trillion won in 1996 and 10.8 trillion won in 1997. The figure even edged up slightly in 1998, when the foreign exchange crisis had all but frozen consumer spending.

Transportation tax revenues fell from 8.9 trillion won in 1999 to 8.4 trillion won last year owing to a drop gasoline consumption from 10 million kiloliters in 1999 to 9.7 million kl in 2000.

Government earnings from the tax on liquor climbed 11.6% from 1.9 trillion won in 1999 to 2.1 trillion won last year. The increase was largely attributable to a drastic hike in the liquor tax on soju from 30% to 72% and came despite a drop in soju consumption. Warehouses delivered just 833,168 kl of soju last year, down from 976,676 kl in 1999. Thanks to lower tax rates on beer and whiskey, the delivery quantity of these two types of spirits increased, though tax revenues on whiskey sales still fell.

Kwon Choon-Ki, chief of the NTS consumption tax department, said that based on the liquor tax earnings, as well as the figure for liquefied petroleum gas (LPG), an alternative to gasoline, overall consumption patterns in Korea appear to be changing.

Ha Im-Sook artemes@donga.com